Sterling bounced around a bit following Theresa May’s resounding defeat on her Brexit deal in parliament last night but it is not a whole lot changed overall, if anything a touch firmer against both the euro and the dollar at about 88.5p and close to $1.29 respectively this morning. The euro, meanwhile, dipped below the $1.14 level against the dollar after Mario Draghi said slower growth in the Euro area may last for longer than previously expected
PM May’s deal was defeated by a huge majority of 230 with 118 of her own party MPs dissenting. Given the scale of her defeat she invited the opposition to put down a motion of no confidence in her government which the Labour party duly did, but it is unlikely to succeed (the vote is tonight) as the DUP has said it will support May. If that’s the case, May will lay out a Plan B (whatever it may be) in parliament next Monday which MPs will have a chance to debate
Depending on who one reads and listens to, some think yesterday’s events have increased the chances of a “no deal” Brexit while others say a “softer” exit is now more likely. What we do know, now that parliament has thrown out May’s deal, is that the legal default is a no deal Brexit on March 29th. But it’s believed parliament is against the latter, so the issue to be resolved is whether there is another form of Brexit that can command majority support in parliament? Or will the people ultimately get to decide?
In an appearance before the European Parliament yesterday, Mario Draghi said the Euro area economy continues to expand but at “lower and lower rates”, adding that the slowdown in growth may now last longer than previously expected. The read across from the latter is that interest rates may also remain unchanged for longer
Data due today includes CPI inflation in the UK while Mark Carney appears before the Treasury Select Committee of parliament to discuss the Bank od England’s recent financial stability report